After helping push the GameStop stock to over $300 per share, tech entrepreneur and billionaire Elon Musk has found another target: dogecoin.
The cryptocurrency that was originally designed as a joke, with its founders not expecting it to serve any real purpose has received a huge boost by a recent series of tweets by the owner of Tesla and SpaceX and the richest man alive today.
In 2013, the software developer Billy Markus saw bitcoin gain in popularity and decided to make a cryptocurrency as a joke. He first based it on the videogame “Animal Crossing,” and called it bells, named after the game’s pretend currency.
People online hated it, he said. So when another developer, Jackson Palmer, shared a new idea for a cryptocurrency based on the doge meme, Markus decided to run with the idea. Thus, the dogecoin was born.
Dogecoin could have remained just a joke cryptocurrency based on an internet meme, but it had one thing going for it. A strong community which often contributed to charitable causes.
In 2014, a fundraiser was established by the Dogecoin community to raise $50,000 for the Jamaican Bobsled Team, which had qualified for, but could not afford to go to, the Sochi Winter Olympics.
Inspired by the Winter Olympics fundraiser and smaller charity fundraising successes, the Dogecoin Foundation, led by Eric Nakagawa, began collecting donations to build a well in the Tana river basin in Kenya in cooperation with Charity: Water. They set out to raise $30,000 worth of Dogecoin for the project. The campaign succeeded, collecting donations from more than 4,000 donors.
That fact, as well as its meme status, could have been why the currency got the attention, and the affection of Elon Musk. The billionaire entrepreneur is known to be meme-savvy, as well as for his ability to move the markets.
Therefore, tweets like these are not surprising, and neither is their effect. And as Dogecoin surged as a topic on WallStreetBets, Musk took notice. In late January, the price of dogecoin rose to 8 cents from half a cent, where it had traded at the beginning of the month.
Wallstreetbets was the Reddit forum that behind the GameStop surge, which was also helped along by Musk. The entrepreneur did not hide his disdain for short sellers, tweeting that the entire operation should be illegal.
Short selling involves getting a stock as a loan, selling it, and buying it back when the loan contract expires. Musk asked why should that sort of operation be tolerated, when it is not something that is allowed in other transactions:
Musk also vocally criticized Robinhood, the retail trading app which halted all purchases of GameStop stocks, severely lowering its price.
The pattern of Musk distrusting governments and financial institutions is nothing new. In a previous interview he stated that Bitcoin will likely only be used in illegal transactions, but that “that might not necessarily be a bad thing”, alluding to the fact that governments are capable of making wrong decisions and abusing their power.
After GameStop stock ultimately collapsed, Musk said he would go on a Twitter break. The break only lasted about 46 hours, and was broken with, you guessed it, dogecoin memes.
Dogecoin is a joke cryptocurrency, and it will likely remain so. Unlike Bitcoin, its founder has changed the code so that it can be mined indefinitely, which creates a real downward push on the price. The move was justified precisely so that Dogecoin remains what it is, a meme. Therefore, it is very unlikely that Musk considers Dogecoin to be a serious alternative to the modern financial system.
Musk seems to be doing something else entirely. By pushing Dogecoin, he is likely just bringing attention to how the financial system is rigged for the big players. Either that, or he is just doing it for the memes.